The document provides an economic overview and analysis of trends for the Treasure Valley real estate market in Idaho. It summarizes key economic indicators such as GDP growth, unemployment rates, and housing starts to illustrate the business cycle and impact of the recession. Specifically, it shows how the housing bubble and subsequent collapse affected home prices, construction, and the overall economy. The presentation concludes that while the global and US economies remain sluggish, the housing market appears to be stabilizing and signs point to a return to more normal economic conditions.

1. Economic Trends &
Implications for
Treasure Valley
Real Estate
Presented by
Brian Greber
March 8, 2012
© Brian J Greber 2012 1

2. INTRODUCTION
Brian Greber, Ph.D.
B.S. Forestry (WVU)
M.S. (WVU), Ph.D.(VT) Resource Economics
19 years industry/executive experience (most recently VP
Marketing & Technology in a Fortune 100 Forest
Products Firm)
14 years teaching, research, policy experience at
universities (VT, OSU, BSU)
Lots of public policy work at the state & federal levels
Have own business
Live in Boise – avid fitness buff and enjoy most things
outdoors
Active with not-for-profits (Pres. The Arc Board)
Great family – 2 kids and “lifelong best friend”
© Brian J Greber 2012 2 5-2

3. © Brian J Greber 2012 3

4. The Business Cycle
Peak
Peak
Level of Real Output
Peak
Trough
Trough Common link = Unexpected changes in
spending that are often more
psychological than structural
Time
© Brian J Greber 2012 4

5. US Economy In Perspective:
Historic GDP Growth
Real US GDP 1929-2011
(Billion 2005 Chain Weighted $'s)
14,000
1929-2010 3.63%
1950-2010 3.27%
12,000 1970-2010 3.03%
1990-2010 2.89%
10,000
8,000
6,000
4,000
2,000
0 Source:bea.gov
1929
1931
1933
1935
1937
1939
1941
1943
1945
1947
1949
1951
1953
1955
1957
1959
1961
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
© Brian J Greber 2012 5

6. US GDP Growth through Q4 2011:
Believe it or not, the economy is expanding
at an OK pace! 10 Qtrs of growth
Table 1.1.1. Percent Change From Preceding Period in Real Gross
Domestic Product
[Percent] Seasonally adjusted at annual rates
www.bea.gov
© Brian J Greber 2012 6

7. US GDP Growth through Q4 2011 :
Personal Consumption vs. Investment
Volatility is in Investment!
www.bea.gov
© Brian J Greber 2012 7

8. US GDP Growth through Q4 2011 :
Nonres Structures and Residential
www.bea.gov
© Brian J Greber 2012 8

9. US Economy In Perspective:
Historic Unemployment
US Unemployment Rate: January 1948-January 2012
12.0
1950-2012 5.8
10.0 1970-2012 6.3
1990-2012 6.0
2000-2012 6.2
8.0
2009-2012 9.2
6.0
4.0
2.0
0.0
1948
1949
1950
1951
1953
1954
1955
1956
1958
1959
1960
1961
1963
1964
1965
1966
1968
1969
1970
1971
1973
1974
1975
1976
1978
1979
1980
1981
1983
1984
1985
1986
1988
1989
1990
1991
1993
1994
1995
1996
1998
1999
2000
2001
2003
2004
2005
2006
2008
2009
2010
2011
Source:bls.gov
© Brian J Greber 2012 9

10. US Economy In Perspective:
Historic US Residential Construction
US Housing Starts 1960-2012
(Thousands of New Privately Owned Units)
3000
1960-2012 1478
1970-2012 1495
1990-2012 1374
2500 2000-2012 1376
2009-2012 586
Demographic Trend 1350
2000
That ‘s
1500
encouraging!
1000 That ‘s bad!
500
0
Source:stlouisfed.org
1960-01
1961-04
1962-07
1963-10
1965-01
1966-04
1967-07
1968-10
1970-01
1971-04
1972-07
1973-10
1975-01
1976-04
1977-07
1978-10
1980-01
1981-04
1982-07
1983-10
1985-01
1986-04
1987-07
1988-10
1990-01
1991-04
1992-07
1993-10
1995-01
1996-04
1997-07
1998-10
2000-01
2001-04
2002-07
2003-10
2005-01
2006-04
2007-07
2008-10
2010-01
2011-04
© Brian J Greber 2012 10

11. What Caused the Collapse?
• Housing Bubble
– Artificial, not real demand supported housing quantity and price appreciation.
– Investment-based saturation of housing market in “sunshine states”
• Investment stops;
• Home price appreciation stops
– Investors begin to “sell off positions” – “demand became supply” as the base of
existing homes for sale grew,
» Home prices fall
• Investments on a downward spiral
• Homes significant part of economic engine
• Slow down in economy generates unemployment
• “Creative” Mortgages come up for refinancing
– Mortgages “upside down” – house is worth less than current note, can only refinance
portion of pay-off amount.
• Unemployment, upside down mortgages lead to foreclosures
– Foreclosure sales expanded the case of existing homes for sale, again “demand became
supply”
» Home ownership on a downward spiral
© Brian J Greber 2012

12. “Can’t Lose …..”
© Brian J Greber 2012 12

13. Let’s get creative ….
Source: www.calculatedrisk.com
© Brian J Greber 2012 13

14. Easy come, easy go ….
© Brian J Greber 2012 14

15. 50.00
0.00
100.00
150.00
200.00
250.00
1987-01
1987-09
1988-05
1989-01
1989-09
1990-05
1991-01
1991-09
1992-05
1993-01
1993-09
1994-05
1995-01
1995-09
1996-05
1997-01
1997-09
1998-05
1999-01
1999-09
2000-05
2001-01
2001-09
2002-05
2003-01
© Brian J Greber 2012
2003-09
2004-05
Copyright, 2011, Standard & Poor's Financial Services LLC. Reprinted
S&P -Case-Shiller 10 City Home Price Index
2005-01
Historic US Residential Prices
2005-09
2006-05
2007-01
2007-09
2008-05
2009-01
2009-09
House Prices Moderating:
2010-05
2011-01
2011-09
15
Source:stlouisfed.gov

16. May be even better than that…
NAHB/Wells Fargo Housing Opportunity Index 1992-2011
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
1992.3
1995.1
1996.1
1997.1
1998.3
1999.3
2000.3
2004.3
2005.3
2006.3
2009.1
2010.1
2011.1
1992.1
1993.1
1993.3
1994.1
1994.3
1995.3
1996.3
1997.3
1998.1
1999.1
2000.1
2001.1
2001.3
2004.1
2005.1
2006.1
2007.1
2007.3
2008.1
2008.3
2009.3
2010.3
2011.3
2002
Source: www.nahb.org. Index = percentage of homes sold in a given area that are affordable to families earning that area’s
media income during a specific quarter.
© Brian J Greber 2012 16

17. Signs of a Return to Normalcy:
Home Ownership Rates
© Brian J Greber 2012 17

18. A word of caution:
Home Vacancy Rates
© Brian J Greber 2012 18

19. Where are they living?
© Brian J Greber 2012 19

20. Conclusion
• Global economy is in doldrums
• US economy is showing signs of recovery
• Housing is lagging,
– At the bottom?
© Brian J Greber 2012 20

21. © Brian J Greber 2012 21

22. What drives Idaho economic
growth?
New Money!!!
In a regional economy, if the activity does not bring in
outside dollars, you are simply “redistributing the
wealth” and the jobs.
© Brian J Greber 2012 22

23. 3 key components of Idaho’s
legacy growth
1. Natural resources
2. Scalable entrepreneurship
• Focused on new money
• Much of this focused on natural resources
3. In-migration
• Bringing with it personal wealth.
© Brian J Greber 2012 23

24. In-migration: last decade contributed 1.06%/yr to population
Idaho Housing Fundamentals 2010 2000 1990 1980
Totals
Population 1,567,582 1,293,955 1,006,734 943,935
Households 579,408 469,315 360,718 324,107
Housing Units 667,796 527,825 413,322 375,200
Annual Change (Decade Prior)
Population 27,363 28,722 6,280
Households 11,009 10,860 3,661
Housing Units 13,997 11,450 3,812
Annual Average (Decade Prior)
Housing Permits 12,475 10,693 3,944
Annual "Gap"
Change in Housing Units vs Households 2,988 591 151
Housing Permits vs Change in Households 1,466 (167) 283
Decade "Gap"
Change in Housing Units vs Households 29,878 5,906 1,511
Housing Permits vs Change in Households 14,658 (1,669) 2,826
Source: US Census Bureau www.census.gov
© Brian J Greber 2012 24

25. Idaho Building Permits January2001- January2012
Idaho Chips Away at the Overhang….. 2500 Total Units Units in Single-Family Structures
Single Family Average 84%
2000
Peak in 2005, 20,256 units
1500
1000
Trough in 2011, 3.253 units
500
0
2001
2002
2002
2003
2004
2004
2005
2006
2006
2007
2008
2008
2009
2009
2010
2011
2011
2001
2001
2001
2002
2002
2003
2003
2003
2004
2004
2005
2005
2005
2006
2006
2007
2007
2007
2008
2008
2009
2009
2010
2010
2010
2011
2011
2012
Source: US HUD (huduser.org)
© Brian J Greber 2012 25

26. Ada/Canyon County Building Permits January2001- January2012
50% of Activity in Treasure Valley….. 1400 Total Units Units in Single-Family Structures
1200
Single Family Average 87%
1000
Peak in 2005, 11,163 units
800
600
400 Trough in 2010, 1,647 units
200
0
2001
2002
2002
2003
2004
2004
2005
2006
2006
2007
2008
2008
2009
2009
2010
2011
2011
2001
2001
2001
2002
2002
2003
2003
2003
2004
2004
2005
2005
2005
2006
2006
2007
2007
2007
2008
2008
2009
2009
2010
2010
2010
2011
2011
2012
Source: US HUD (huduser.org)
© Brian J Greber 2012 26

27. Keys to Idaho Housing Recovery
• National housing market recovery
– In-migration spurred by housing liquidity in other states
• Influences retirement, second homes, business relocation
• Local employment strength
– Drives household formation
– Ownership rates
– Stems foreclosures
• “Devouring the Inventory Overhang”
– 1+ years worth of housing activity
– Could take as much as 4 years to absorb (clock started in
2011)
© Brian J Greber 2012 27

28. Idaho Recovery: dependent on new money
• Idaho will lag the U.S. out of the economic doldrums. Two national waves
must roll in to lift the Idaho economic boat.
• The first wave is an increase in U.S. business investment.
• As U.S. businesses sense a looming recovery, they will invest in
America's neglected industrial infrastructure to better serve the
recovery.
• This will ripple back to Idaho businesses directly serving this
activity, such as electronics and engineering/business services.
• The second wave is national housing recovery.
• This will help natural resource and building products sectors, but the
more significant impact is
• Make it affordable to EXIT other regions to restart in-migration
(which has fallen from 1.87% in 2007 to 0.44% in 2010!
© Brian J Greber 2012 28

29. Despite Housing:
Idaho Is Recovering
Objective
BSU's Idaho Leading Index vs Historic GDP: Jun 2012
Real GDP Index
53,500 110
108
52,500
106
51,500
GDP in Million Chain Weigted 2005 Dollars
104
BSU's Idaho Leading Index
50,500
102
49,500 100
98
48,500
96
47,500
94
46,500
92
2011 and 2012 GDP estimated using the
Governor's Personal Income Increase Forecasts
45,500 90
Dec-05
Dec-06
Dec-07
Dec-08
Dec-09
Dec-10
Dec-11
Sep-05
Sep-06
Sep-07
Sep-08
Sep-09
Sep-10
Sep-11
Jun-06
Jun-07
Jun-08
Jun-09
Jun-10
Jun-11
Jun-12
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
Mar-11
Mar-12
www.cobe.boisestate.edu/businessresources
© Brian J Greber 2012 29

30. Idaho Is Recovering:
Employment Lags
Objective 670
BSU's Idaho Leading Index vs Historic Employment: Jan 2012
Actual Employment Index
115
650 110
630 105
Idaho Employment in Thousands
BSU's Idaho Leading Index
610 100
590 95
570 90
550 85
Dec-05
Dec-06
Dec-07
Dec-08
Dec-09
Dec-10
Dec-11
Sep-05
Sep-06
Sep-07
Sep-08
Sep-09
Sep-10
Sep-11
Jun-06
Jun-07
Jun-08
Jun-09
Jun-10
Jun-11
Jun-12
Mar-06
Mar-07
Mar-08
Mar-09
Mar-10
Mar-11
Mar-12
www.cobe.boisestate.edu/businessresources
© Brian J Greber 2012 30

31. © Brian J Greber 2012 31

32. Conclusions
• The economy, national and regional, is poised for
growth in 2012-2013
– In fact, the economy has been expanding over the past
2+ years
• Business investment will precede
residential, nationally and regionally.
• The Idaho residential construction market will lag
the national recovery with a significant lag.
• Visit our website:
http://cobe.boisestate.edu/businessresources/
© Brian J Greber 2012 32